When is the Remedy of Rescission Available in Nevada?

Rescission returns both parties to their pre-contractual situation.[1]  Rescission is a remedy which allows the “harmed” party, either through unilateral action, or through the institution of a suit in equity, to abrogate or cancel the contract totally, and returns the parties to the position they held prior to the execution of the contract.[2]  “A priori, where there has been a valid rescission of the contract, there is no longer any contract and, therefore, no longer a cause of action for breach.”[3]  (emphasis added.)

Since rescission voids a contract ab initio, a claim for damages, which must insist upon the existence of the contract, must be barred.[4]  Restitution is a form of rescission.[5]  Rescission has two aspects: (1) cancellation of a contract of sale; and (2) restitution of the purchase price.[6]  Restitution is an appropriate remedy where a contract has been rescinded.[7]  The Nevada Supreme Court has unequivocally declared that restitution (rescission) and damages are inconsistent remedies, and that election of one is a bar to the other.[8]

[1] Bergstrom v. Est. of DeVoe, 854 P.2d 860, 861-62 (1993) (Court held that one cannot gain both the benefits of a rescission of a contract and award for damages for breach of that contract).

[2] Great am. Ins. Co. v. Gen. Builders, Inc., 113 Nev. 346, 934 P.2d 257, 262, n.6 (1997).

[3] Id.

[4] Bergstrom v. DeVoe, 109 Nev. 575, 577, 854 P.2d 860, 862 (1993).

[5] Reed v. Sixth Jud. Dist. Ct., 75 Nev. 338, 34, 341 P.2d 100, 101 (1959)

[6] Dan B. Dobbs, Law of Remedies, 552 (2d. Ed. 1993)

[7] Id.

[8] Mullinix, 81 Nev. At 454; See also Norris, 225 P.2d at 268; SJS Inv., 597 N.E.2d at 1215; Timmons, 601 S.W.2d at 689; Loflin v. Blume, 1198 WL 132679 (Tenn. Ct. App. 1998); In re Zimmermann v. Thompson, 114 N.W.2d 116, 117 (Wis. 1962); Mansfield v. Smith, 277 N.W.2d 740, 748 (Wis. 1979).

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Jay Young, Mediator and Arbitrator

Jay Young is a Las Vegas, Nevada attorney. His practice focuses on acting as an Arbitrator and Mediator. Mr. Young can be reached at 702.667.4868 or at jay@h2law.com. The information provided on this site does not, and is not intended to constitute legal advice. You understand each legal matter should be considered to be unique and subject to varying results. You should not take or refrain from taking action based on any information contained on this website without first consulting legal counsel, as it is not intended to advise you on your particular matter. Further, you understand that no guarantee is given that the information contained herein is an accurate statement of the law at any given point in time, as the law is constantly changing. Guest bloggers are responsible for their own content, which is not to be construed as an article authored by Jay Young. Please see http://nevadalaw.info/disclaimer

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